---
title: "Judicious Decentralization: Why Blockchain isn't the Answer to Everything"
date:  2018-03-27
category:  Essay
---

The hype surrounding blockchain and cryptocurrencies at the end of 2017 and the
beginning of 2018 was astonishing.  For a cryptography-based database
technology, the amount of interest in the tech communities and the wider public
has been difficult to understand (at least to me).  The tone in many quarters
has been that blockchain is going to revolutionize everything from finance to
education, science to gaming.  What is it that makes this technology seem so
powerful to people?

One of the primary appeals of blockchain, in many different use cases, is that
it is decentralized, and thus decision making is (potentially) distributed and
there is not a single point of failure.  These properties should make a whole
range of systems more robust.  As an example, blockchains for Bitcoin and
Ethereum are stored on many computers, all across the planet and because of
this, are more resistant to failure or attack than are databases or other data
stores which are housed in a single machine (or even on multiple machines, using
typical redundancy/backups, which is standard today in large-scale / important
apps and services).  Furthermore, the consensus that the network demands of its
nodes incentivizes cooperation, which is a topic that could have deep social
significance as this technology matures.

Decentralization also offers the potential for more social, networked forms of
service provision than those which are possible in the existing technical and
financial landscape.  Use cases of this sort include a blockchain-supported
energy grid, comprising micro-providers and micro-consumers, with tiny
increments of solar energy being doled out on demand as users wander around a
city.  Another possibility is a mesh-network of micro-ISPs (Internet Service
Providers), where individuals share bandwidth in exchange for micropayments.
These sorts of distributed platforms could function as alternatives or
competitors to the monolithic infrastructure we see today in sectors like
energy, information technology, and finance.

Perhaps the most interesting category of applications that blockchain is
predicted to impact concerns high-level, abstract organizational functions, such
as decentralized governance and organization (e.g., DAOs, or Decentralized
Autonomous Organizations), algorithmic democracy, decentralized lending logic,
crowdsourced research labor, and a host of new sharing-economy platforms (cars,
bikes, computers, etc).  The effects of blockchain on these areas of communal
life could be revolutionary.

Despite the theoretical potential for blockchain to disrupt so many areas of
life and society, there is today a lot of overwrought rhetoric surrounding the
technology.  That is to say: though blockchain will probably find a number of
important uses in the coming years, it is not going to solve the better part of
humanity's problems.  We should take a more measured stance regarding its value.

A refrain bouncing gaily around the internet is that we should "decentralize
everything".  This, incidentally, is an excellent search term if you want to
find content produced by some of the true believers in the crypto space (I
recommend [duckduckgo.com](duckduckgo.com) for such searches).  Given how
important decentralization is in narratives about blockchain, I think it is
worth pointing out that decentralization is not inherently superior to
centralization as an organizing principle.  Some evidence for this comes from
biology: higher organisms have a "central" nervous system.  The tendency in
evolution towards increasing localization of sensory appendages in a head
region, from jellyfish through ants, wolves, and humans, is called
[cephalization](https://en.wikipedia.org/wiki/Cephalization).  It is not
entirely clear that this localization is necessary for higher intelligence, but
it is not easy to think of highly intelligent creatures that do not display it.

Another example of centralization being effective comes from human social
structures: most businesses have CEOs or presidents, universities have
presidents, and most sports teams have captains and coaches.  Governments have
prime ministers and presidents (and often dictators).  Again, these are forms of
centralization of control.  The people at the head of the organizations function
much like the head of an animal: they serve as a hub for incoming information,
which they synthesize to generate output that radiates "downward" through the
organization.  In this way, complex structures and institutions can function as
a cohesive unit.

I'll note that decentralization of control clearly does have advantages in some
cases. The cooperative behavior of bees, ants, humans, and other animals suggest
that a hybrid intelligence, partially centralized and partially decentralized,
is often nature's solution to complex problems.  More fundamentally, complex
systems, such as eukaryotic cells, multi-cellular organisms, ecosystems, and
social institutions, tend to exhibit a tension / complementariness between
top-down (or centralized) and bottom-up (or decentralized) control.  Both appear
to be needed, much of the time.

Perhaps it is the case that we have not previously had the capacity or
technology to effect proper decentralized organization, and blockchain will
answer that problem.  Maybe decentralized governance will show centralized
leadership to be crude and ineffective, a vestige of our roots.  But a more
likely outcome, I think, is that we will find that some domains are excellent
candidates for decentralized control structures, and others are better managed
through centralized operations.  For those starting businesses in the crypto /
blockchain space, or those investing in said companies, it could be immensely
valuable to know which systems fit which profile.
